2014 INTERIM RESULTS PRESENTATION 31 JULY 2014 1 Forward-Looking - - PowerPoint PPT Presentation

2014 interim results presentation
SMART_READER_LITE
LIVE PREVIEW

2014 INTERIM RESULTS PRESENTATION 31 JULY 2014 1 Forward-Looking - - PowerPoint PPT Presentation

2014 INTERIM RESULTS PRESENTATION 31 JULY 2014 1 Forward-Looking Statements Disclaimer The information contained in this presentation has not been independently verified and this presentation contains various forward- looking statements that


slide-1
SLIDE 1

31 JULY 2014

2014 INTERIM RESULTS PRESENTATION

1

slide-2
SLIDE 2

2

Forward-Looking Statements Disclaimer

The information contained in this presentation has not been independently verified and this presentation contains various forward-looking statements that reflect management‟s current views with respect to future events and financial and operational performance. The words „anticipate‟, „target‟, „expect‟, „estimate‟, „intend‟, „plan‟, „goal‟, „believe‟ and similar expressions or variations on such expressions identify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond Merlin Entertainments plc‟s (the “Group‟s”) control and which may cause actual results or performance to differ materially from those expressed or implied from such forward-looking

  • statements. All statements (including forward-looking statements) contained herein are made and

reflect knowledge and information available as of the date of preparation of this presentation and the Group disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward- looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. Nothing in this document should be construed as a profit forecast.

slide-3
SLIDE 3

Agenda

Overview Financial Results Strategic Update Nick Varney Andrew Carr Nick Varney

3

slide-4
SLIDE 4

Summary Group Performance

A strong start to 2014. On track for full year expectations.

4 Throughout the presentation, all numbers are presented on an underlying basis, excluding exceptional and non-trading items, unless otherwise stated.

1 Constant currency based on year to date 2014 average foreign exchange rates.

Visitors: 27.5m (+6.6%) Revenue: £513m (+11.2% CC1, +6.1% reported) Like for like revenue growth: +8.1% EBITDA: £120m (+14.3% CC1, +7.5% reported) Net Income: £29m (2013: loss of £11m) Dividend: 2.0p

slide-5
SLIDE 5

Summary Op. Group Performance

Portfolio benefits highlighted during periods of differing divisional performance

5 Madame Tussauds Wuhan

Like for like revenue growth: +8.1%

Midway Attractions +1.9% LEGOLAND Parks +19.0% Resort Theme Parks +7.7%

slide-6
SLIDE 6

Progress on Strategic Growth Drivers

6

Continued delivery on strategic growth drivers

Capex cycle

CBeebies Land – Alton Towers Legends of Chima waterpark – LEGOLAND California Penguin Ice Adventure – SLC Birmingham

Synergies

VIP Pass launch Ticketing trials

Destination positioning

LEGOLAND Deutschland new hotel and LEGOLAND Billund hotel extension Azteca hotel in Chessington

Midway roll out

5 opened year to date MT Singapore to open in Nov/Dec

LLP Developments

LEGOLAND Dubai planned for 2016 LEGOLAND Japan planned for 2017

Strategic Acquisitions

CBeebies Land at Alton Towers

slide-7
SLIDE 7

Progress on Strategic Growth Drivers

6

Continued delivery on strategic growth drivers

Capex cycle

CBeebies Land – Alton Towers Legends of Chima waterpark – LEGOLAND California Penguin Ice Adventure – SLC Birmingham

Synergies

VIP Pass launch Ticketing trials

Destination positioning

LEGOLAND Deutschland new hotel and LEGOLAND Billund hotel extension Azteca hotel in Chessington

Midway roll out

5 opened year to date MT Singapore to open in Nov/Dec

LLP Developments

LEGOLAND Dubai planned for 2016 LEGOLAND Japan planned for 2017

Strategic Acquisitions

slide-8
SLIDE 8

Progress on Strategic Growth Drivers

6

Continued delivery on strategic growth drivers

68-room King‟s Castle hotel at LEGOLAND Deutschland

Capex cycle

CBeebies Land – Alton Towers Legends of Chima waterpark – LEGOLAND California Penguin Ice Adventure – SLC Birmingham

Synergies

VIP Pass launch Ticketing trials

Destination positioning

LEGOLAND Deutschland new hotel and LEGOLAND Billund hotel extension Azteca hotel in Chessington

Midway roll out

5 opened year to date MT Singapore to open in Nov/Dec

LLP Developments

LEGOLAND Dubai planned for 2016 LEGOLAND Japan planned for 2017

Strategic Acquisitions

slide-9
SLIDE 9

Progress on Strategic Growth Drivers

6

Continued delivery on strategic growth drivers

Opening weekend at MT Beijing

Capex cycle

CBeebies Land – Alton Towers Legends of Chima waterpark – LEGOLAND California Penguin Ice Adventure – SLC Birmingham

Synergies

VIP Pass launch Ticketing trials

Destination positioning

LEGOLAND Deutschland new hotel and LEGOLAND Billund hotel extension Azteca hotel in Chessington

Midway roll out

5 opened year to date MT Singapore to open in Nov/Dec

LLP Developments

LEGOLAND Dubai planned for 2016 LEGOLAND Japan planned for 2017

Strategic Acquisitions

slide-10
SLIDE 10

Progress on Strategic Growth Drivers

6

Continued delivery on strategic growth drivers

Capex cycle

CBeebies Land – Alton Towers Legends of Chima waterpark – LEGOLAND California Penguin Ice Adventure – SLC Birmingham

Synergies

VIP Pass launch Ticketing trials

Destination positioning

LEGOLAND Deutschland new hotel and LEGOLAND Billund hotel extension Azteca hotel in Chessington

Midway roll out

5 opened year to date MT Singapore to open in Nov/Dec

LLP Developments

LEGOLAND Dubai planned for 2016 LEGOLAND Japan planned for 2017

Strategic Acquisitions

slide-11
SLIDE 11

Financial Results

7

slide-12
SLIDE 12

Merlin Reporting Cycle

Event Date1 2013 % revenue2 Disclosure Delivery Q1 IMS May 15th 22%

  • Group level revenue growth
  • Conf. call

Interims July 31st 41%

  • Full P&L
  • Detail by Op. Group

Audio Webcast Q3 IMS September 18th 77%

  • Op. Group level revenue

growth Meeting Pre-close update December 2nd 94%

  • Group level revenue growth
  • Prelims

February 27th 100%

  • Full P&L
  • Detail by Op. Group

Meeting

Note: Subject to change

1 Based on 2014 announced schedule 2 Shows cumulative revenue up to the end of the reporting period

8

slide-13
SLIDE 13

9

Summary

£ millions, unless stated H1 2014 H1 2013 Reported Growth Constant FX Growth Like for like Growth Revenue 513 483 6.1% 11.2% 8.1% EBITDA 120 111 7.5% 14.3% Margin 23.3% 23.0% Operating Profit 71 64 10.0% 18.0% PBT 40 (11) Net Income 29 (11) Dividend 2.0p n/a

Further growth in visitors, revenue and profits

slide-14
SLIDE 14

10

Revenue Bridge H1‟13 - H1‟14

513 483 (22) 37 6 8 1 H1 2013 Revenue FX LFL

  • Accomm. Midway roll
  • ut

LLP Dev. Acquisitions Central H1 2014 Revenue

Revenue growth driven by like for like. NBD growth H2-weighted.

Net New Business Development: £15m Like for like 8.1%1

1 Like for like growth based on those sites owned and operated before 2013. These contributed £450m of revenue in H1 2013.

slide-15
SLIDE 15

11

Midway Financials

Underlying growth despite difficult comparables

£ millions, unless stated H1 ‘14 H1 ‘13 Reported Constant Currency Revenue 233 235 (0.6)% 5.6% Like for like growth1 1.9% 9.3% EBITDA 85 86 (1.1)% 3.7% Operating Profit 61 62 (1.7)% 2.2% Existing Estate Capex 18 15 18.7%

Five new sites opened in H1 MT Singapore to open in Nov/Dec LFL Growth below long term trend:

Strong H1‟13 comparatives Political disruption in Bangkok „Polar vortex‟ on US attractions Deferred high year capex projects in two sites

FX headwind

1 2013 like for like growth is based on 2013 and 2012 figures, on a constant currency basis using 2013 exchange rates.

slide-16
SLIDE 16

12

LEGOLAND Parks Financials

Growth boosted by LEGO movie and more favourable weather

Impact of LEGO movie:

Successful marketing and promotion Greatest impact in US parks Some uplift in Europe and LDCs Uplift in retail spend – implications for margins

Weather more favourable throughout Easter, particularly in LEGOLAND Windsor Strong Group promotional activity Hotel extension at LEGOLAND Billund and new hotel at LEGOLAND Deutschland have traded well Capex projects on track and budget

£ millions, unless stated H1 ‘14 H1 ‘13 Reported Constant Currency Revenue 162 139 16.5% 22.8% Like for like growth1 19.0% 1.2% EBITDA 50 38 31.7% 41.0% Operating Profit 39 27 42.4% 54.1% Existing Estate Capex 18 18 0.2%

1 2013 like for like growth is based on 2013 and 2012 figures, on a constant currency basis using 2013 exchange rates.

slide-17
SLIDE 17

13

Resort Theme Parks Financials

Trading on track ahead of peak season

Good performance from Heide Park (high year capex) CBeebies Land at Alton Towers Weather more favourable throughout Easter New Azteca hotel at Chessington expected to open in August Capex projects on track and budget

£ millions, unless stated H1 ’14 H1 ‘13 Reported Constant Currency Revenue 117 109 7.0% 8.4% Like for like growth1 7.7% 0.0% EBITDA 2

  • Operating Loss

(12) (12) (0.1)% (0.6)% Existing Estate Capex 20 18 13.7%

1 2013 like for like growth is based on 2013 and 2012 figures, on a constant currency basis using 2013 exchange rates.

slide-18
SLIDE 18

14

Summary Underlying P&L

Overall, on track to meet full year expectations

£ millions, unless stated H1 ‘14 H1 ‘13 %

  • Op. Group EBITDA

137 124 9.8% Central Costs (17) (13) (30.3)% EBITDA 120 111 7.5% D&A (49) (47) (4.1)% Operating profit 71 64 10.0% Net finance costs (31) (75) 59.0% PBT 40 (11)

  • Tax

(11)

  • Net profit / (loss)

29 (11)

  • Share-based payments now

allocated to Op. Groups - split approximately 50:50 between Op. Groups and Central Central costs of between £30-35m in FY2014 D&A to remain at 8-9% of revenue 2014 senior facility costs of 4.4%

£7m of finance lease interest £6m non-cash amortisation of financing costs

Strong trading in US: Effective Tax Rate of 28% in 2014, and Cash Tax Rate of 24% FX: FY2013 EBITDA £21m lower if based upon latest rates P&L Guidance

slide-19
SLIDE 19

15

Capital Expenditure

£ millions, unless stated H1 ‘14 H1 ‘13 Existing Estate 61 52 New Business 40 33 Accommodation 17 9 Midway 23 24 LLP Development Total Capex 101 85 Acquisitions 1 Total Capex and Acquisitions 101 86

Year-on-year increase in EE capex driven by phasing H1 guidance in line with expectations FY2014 guidance raised to £195-200m

Reflects LEGOLAND Japan capex of £5-10m

Investment consistent with strategic objectives

slide-20
SLIDE 20

16

Cashflow

6 120 38 (20) (101) (30) (1) H1 2014 EBITDA Working capital Cash tax Capex Net financing costs Other Net cash flow

Small cash inflow reflects seasonality of capex vs profit generation

Movement in Net Debt December 2013 (1,006) Net cash flow 6 FX 25 Other (2) June 2014 (977)

slide-21
SLIDE 21

Strategic Update

17

slide-22
SLIDE 22

22

LEGOLAND Japan

Summer 2017 opening Located in centre of country, between Tokyo and Osaka. Catchment area of 20m+ people Good infrastructure and transport links. No local competition Strongest theme park market in Asia Developed theme park market High density of population Highly affluent market Good LEGO brand awareness - huge upside in worlds 2nd largest toy market Strong support from KIRKBI (property investment) and City of Nagoya (infrastructure) Merlin to invest £53m with target cash ROIC of at least 20% EBITDA margins of 15-20%

18

slide-23
SLIDE 23

LEGOLAND Japan

23

Smaller footprint than other parks, but significant scope for expansion long term „Best practice‟ from existing six LEGOLAND parks Concept has been evolved and upgraded for the Japanese market

Parking Initial park Expansion

19

slide-24
SLIDE 24

LEGOLAND Parks Developments

Florida opened on time and on budget in October 2011 Performance has been ahead of expectations On track for at least 20% ROIC Malaysia opened in September 2012 Management contract c£2-3m EBITDA, no capex

20

Successful track record of openings

Potential for up to 20 LEGOLAND parks across the world. Targeting at least one opening every 3 years.

2016 2017 Existing LEGOLAND Parks Announced openings Opportunities

Dubai expected to open in 2016 LEGOLAND Japan expected to open in summer of 2017

Future Developments

slide-25
SLIDE 25

Summary and Outlook

21

Summary Outlook Well placed for growth in 2014 and beyond Continued growth in existing estate More challenging comparatives in H2

  • Op. Group like for like trading

differences YTD likely to remain, but narrow in balance

  • f 2014

NBD plans on track for both Midway and accommodation Good start to the year Early peak season trading has been positive

slide-26
SLIDE 26

Q&A

22

slide-27
SLIDE 27

Appendix

23

slide-28
SLIDE 28

Revenue Bridge H1‟13 – H1‟14

450 513 483 (22) 11 10 28 (1) 10 15 1 H1 2013 Revenue FX 2012 closing estate in 2013 Visitors RPC Other

  • Accomm. Midway

roll out LLP Dev. Acq's Central H1 2014 Revenue

24

Like for like 8.1% Gross New Business Development: £26m

1 Like for like growth of 8.1% (£37m) is based upon the 2012 closing estate revenue contribution in 2013, translated at constant currency 2014 rates. In H1 2013,

£11m of revenue was generated from those sites opened after the end of 2012, and these are therefore excluded from the like for like calculation. 1 Denominator for 2014 like for like calculation Contribution in H1 2013 from those sites

  • pened after

2012 and therefore excluded from the like for like calculation

slide-29
SLIDE 29

25

Net Debt

June 2014 June 2013 Banks loans and borrowings 1,161 1,370 Cash and cash equivalents (268) (147) Net bank debt 893 1,223 Finance lease

  • bligations

84 86 Net debt 977 1,309

£332m reduction in Net Debt from IPO proceeds and cash generation

S&P: BB Moody‟s: Ba3

Credit Ratings – Corporate Family Rating

slide-30
SLIDE 30

FX Sensitivity - Revenue

H1’ 13 average FX rates H1’ 14 average FX rates % change Revenue impact EUR 1.18 1.21 (3.3)% (3) USD 1.54 1.66 (8.2)% (9) AUD 1.52 1.84 (21.3)% (6) Other (4) Total (22)

26

slide-31
SLIDE 31

FX Sensitivity - EBITDA

H1’ 13 average FX rates H1’ 14 average FX rates % change EBITDA impact EUR 1.17 1.23 (4.6)% (1) USD 1.53 1.67 (8.7)% (3) AUD 1.53 1.84 (20.2)% (1) Other (2) Total (7)

27

slide-32
SLIDE 32

Operating Group financials

28

Midway Attractions LEGOLAND Parks Resort Theme Parks Group 2014 2013 % 2014 2013 % 2014 2013 % 2014 2013 % Statutory visitors (m)

17.4 17.0 2.8% 4.6 3.9 16.6% 4.4 4.0 8.8% 26.4 24.9 5.9%

Revenue per cap (£)

12.82 13.14 (2.4)% 29.44 29.65 (0.7)% 21.22 21.43 (1.0)% 17.09 17.07 0.1%

Visitor revenue (£m)

224 223 0.3% 134 116 15.8% 93 86 7.7% 451 425 6.0%

Other revenue (£m)

9 12 (18.4)% 28 23 19.9% 24 23 4.7% 62 58 6.9%

Total revenue (£m)

233 235 (0.6)% 162 139 16.5% 117 109 7.0% 513 483 6.1%

LFL revenue growth

1.9% 9.3%

  • 19.0%

1.2%

  • 7.7%

0.0%

  • 8.1%

4.3%

  • EBITDA (£m)

85 86 (1.1)% 50 38 31.7% 2

  • 120

111 7.5%

  • Op. Profit (£m)

61 62 (1.7)% 39 27 42.4% (12) (12) (0.1)% 71 64 10.0%

  • EE. Capex (£m)

18 15 18.7% 18 18 0.2% 20 18 13.7% 61 52 18.6%

All figures are based on interim results. EE = Existing Estate Statutory Visitors exclude LEGOLAND Malaysia and joint ventures

slide-33
SLIDE 33

Attraction Count

29

UK

  • Cont. Europe

Americas Asia Pacific Group

3 May 2014 Mov’t 28 June 2014 3 May 2014 Mov’t 28 June 2014 3 May 2014 Mov’t 28 June 2014 3 May 2014 Mov’t 28 June 2014 3 May 2014 Mov’t 28 June 2014 SEA LIFE 13

  • 13

18

  • 18

6

  • 6

8

  • 8

45

  • 45

Madame Tussauds 2

  • 2

3

  • 3

4 1 5 6 1 7 15 2 17 Dungeons 5

  • 5

3

  • 3
  • 1

1

  • 8

1 9 LDC 1

  • 1

2

  • 2

6 1 7 1

  • 1

10 1 11 Eye 2

  • 2
  • 1
  • 1

3

  • 3

Other

  • 6
  • 6

6

  • 6

Midway 23

  • 23

26

  • 26

16 3 19 22 1 23 87 4 91 LLP 1

  • 1

2

  • 2

2

  • 2

1

  • 1

6

  • 6

RTP 4

  • 4

3

  • 3
  • 7
  • 7

Group 28

  • 28

31

  • 31

18 3 21 23 1 24 100 4 104

slide-34
SLIDE 34

30

slide-35
SLIDE 35

31